Solvency and Financial Condition Report 2022

01

Introduction

This Solvency and Financial Condition Report (SFCR) has been prepared in line with the requirements of the Solvency

1. (SII) Regulations, to assist clients of the St. James's Place Group (the Group) and other stakeholders in understanding the nature of our business, how it is managed, and its solvency position.

This is a single SFCR that incorporates consolidated information at the level of the Group, and solo information for the subsidiary insurance undertakings located within the UK and European Union: St. James's Place UK plc (SJPUK) and St. James's Place International plc (SJPI). This report is prepared in compliance with rule modification A00003533 granted by the PRA with effect from 1 January 2022.

Following the UK's exit from the EU and the end of the subsequent Transitional Period, the PRA has adopted the SII requirements with only limited changes. Throughout this document, any references to the SII Directive and associated Delegated Regulation should be interpreted as referring to:

• the UK enactment of the legislation (unless otherwise indicated) for the Group and for SJPUK; and
• the EU enactment of the legislation for SJPI.

Relevant information about the business of our Group is provided in the Group's Annual Report and Accounts for the year ended 31 December 2022 (the Group Report & Accounts), a copy of which can be found at www.sjp.co.uk/shareholders/reports-presentation-and-webcasts/. Where appropriate we will refer readers to that document.

There are, however, certain specific SFCR requirements which are not already reported publicly elsewhere, and those are specifically included in this report. In particular this report includes full reporting of the SII valuation undertaken at 31 December 2022, and the associated capital position for our Group. Those results are also presented in quantitative reporting templates (QRTs), and the Group's and its solo insurance undertakings' submissions can be found in the Appendix to this report.

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02

Summary

St. James's Place plc is a FTSE 100 financial advice business. We provide holistic financial planning and wealth management services, working in partnership to plan, grow and protect clients' financial futures. Our services are delivered exclusively by a team of 4,693 highly-skilled advisers within the St. James's Place Partnership. We want our clients to feel confident about their finances, so we provide a broad range of products and services to meet their needs, both for today and for the future. To complement the provision of sound, long-term financial advice we have a distinctive investment management approach, where we design and build our own range of investment funds and portfolios, but contract some of the world's best external managers to manage them.

We aim to give all of our stakeholders the confidence to create the future they want.

The Group provides insurance-based investment and pension products, mainly to UK clients, through two key subsidiary companies - St. James's Place UK plc (SJPUK) which is based in the UK, and St. James's Place International plc (SJPI) which is based in the Republic of Ireland. The Group also provides insurance-based investment products to a small but growing number of clients, mainly expatriates, in Asia through a branch of SJPI based in Singapore and a subsidiary of SJPUK based in Hong Kong.

The Group also provides ISAs, unit trusts and discretionary fund management.

Our Business

2022 has been yet another extraordinary year. The favourable external environment which emerged towards the end of 2021, with vaccination programmes in full swing and economies rebounding strongly, continued into the start of 2022. However macroeconomic and geopolitical conditions across the globe quickly deteriorated, with high inflation, rising interest rates and the conflict in Ukraine creating a more difficult backdrop for many investment markets, companies and individuals worldwide.

Our business has been resilient in the face of the challenging external environment, once again demonstrating the strength of our advice-led business model. With retention excluding regular income withdrawals and maturities remaining strong at 96.5% (2021: 96.4%), net inflows totalled £9.8 billion (2021: £11.0 billion), equivalent to 6.4% (2021: 8.5%) of opening funds under management (FUM). The significant falls in investment markets resulted in FUM closing the year at £148.4 billion, down 4% compared to the start of the year.

Our financial business model remains straightforward and unchanged. We attract and then retain funds under management on which we will receive an annual management fee. We use this income to meet our overheads and to invest for the future.

The unit-linked business model means that the financial positions of SJPUK and SJPI have remained resilient throughout the year.

Insurance FUM in the Group and individual entities grew over the year as follows:

1 Figures for SJPUK include closing funds under management of £0.23 billion (2021: £0.25 billion) in a subsidiary life insurance company based in Hong Kong.

Most of the Group's insurance business is investment-related. However, both SJPUK and SJPI have small legacy books of protection business, which are substantially reinsured with highly-rated UK and EU-based reinsurance companies.

The Group has an additional £41.22 billion (2021: £43.21 billion) of funds under management within its unit trust and discretionary fund management companies.

More information about our business can be found in Section A of this report.

03

Summary continued

Risk Management

The Group Board and the Boards of the insurance entities have responsibility for assessing the main risks affecting the business, and these are monitored on a regular basis.

The complex and rapidly evolving macroeconomic environment, which has been exacerbated by political turmoil in

the UK and the conflict in Ukraine, remains a major external risk. No combination of events of this nature can be precisely forecasted and planned for. However through our approach to the fundamentals of risk management the Group continues to be able to demonstrate resilience from a financial and operational perspective. We remain highly confident in our ability to withstand further challenges that may or may not emerge.

Although these risks remain outside of our control, we remain focussed on understanding the degree to which the various outcomes might impact the business to allow us to consider how they might be mitigated. Stress and scenario testing has been performed which demonstrates that the businesses remain resilient, and we continually monitor the changing environment to ensure our analysis and scenario testing remains appropriate.

The key risks that could impact on the profitability of the Group's insurance businesses are:

• Market risk: A reduction in funds under management owing to market shocks, poor market performance or currency and exchange rate movements would reduce future annual management charges, and hence future profits.
• Lapse risk: Similarly, a reduction in funds under management owing to higher withdrawal rates would reduce future annual management charges. This may arise from factors such as changes in the economic climate, poor investment performance, competitor activity, or reputational damage to the Group.
• Expense risk: Higher expenses would reduce future profits.
• Operational risk: Operational risk events, such as a product failure, failure of a third-party administrator or a significant cyber-attack could result in one-off losses as well as wider reputational damage which could impact on client retention.

Although these risks may impact on the future profitability of the Group, they do not have a significant impact on our ability to meet contractual payments to clients. Our investment business is managed on a 'unit-linked' basis, where we hold assets which match our liabilities to clients, ensuring that we are always able to meet clients' withdrawal requests in line with their products' terms and conditions.

The low-risk nature of our business also means that our solvency ratio remains resilient to changes in our business and external markets.

More information about the risks that the business faces, and how we manage them, can be found in Section C of this report.

Our Solvency Position and Capital Management

We continue to manage our balance sheet prudently to ensure the Group's solvency, and that of its subsidiary entities, is maintained safely through the business cycle. We hold assets which match our liabilities to clients, and the remaining assets in the insurance companies are invested in high quality, liquid assets - typically AAA rated money market funds.

Each subsidiary company holds capital which is sufficient to cover any regulatory requirements together with an additional margin which can absorb adverse future changes.

The Group's solvency position assessed on the UK and EU Solvency II regulatory basis is shown in the following table:

1 Before payment of final dividends, as presented in the Group Report & Accounts.

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